KfW Research: German venture capital market started the year on a strong footing

• Domestic start-ups raised EUR 1.6 billion in the first quarter
• US investors are sharply scaling back their activities
• Number of exits rose for the second quarter in a row

In the first quarter of 2025, German start-ups raised some EUR 1.6 billion in 295 financing rounds.

“The German venture capital market thus started the year on a very strong footing, although a clear trend in a particular direction is not yet discernible”,

said Dr Steffen Viete, venture capital (VC) expert at KfW Research. To be sure, at EUR 1.4 billion the deal volume was 14 per cent higher than in the fourth quarter of 2024, but lower than in the same quarter of the previous year (EUR 1.9 billion). The number of transactions fell sharply compared with those two quarters.

At the same time, however, it must be noted that a higher deal volume in past quarters was often driven by individual megarounds with volumes of EUR 250 million and more. Such financing transactions has not have not yet occurred in 2025.

These are the findings of the KfW Venture Capital Dashboard, in which KfW Research publishes quarterly figures on the German venture capital market.

Financing transactions of businesses in the start-up phase – that is, the early phase – made a large contribution to the deal volume at the start of the year. They accounted for more than half (51 per cent) of the financing volume in the first quarter, after 43 per cent in the previous quarter.

Mirroring this trend, the share of financing volume in the scale-up segment – businesses that have already left the start-up phase – fell from 43 per cent to 39 per cent. As US investors often play a significant part in large financing rounds in the growth segment in Germany, their contribution to the VC deal volume in Germany was also significantly lower than usual, with only 13 per cent.

The number of exits showed an encouraging trend, either in the form of sales to other businesses or buyouts with the participation of a financial investor. Overall, 43 exit transactions were registered in the past quarter, and most of them were acquisitions. That figure thus rose for the second consecutive quarter.

“Based on the number of deals, exit activity remains high”,

said Dr Steffen Viete.

“A fly in the ointment is the high current volatility in public markets, which poses a burden for the realisation of exits. By contrast, the interest rate environment in Europe is likely to give the German VC market ongoing impetus in the spring.”

The current KfW Venture Capital Dashboard by KfW Research can be found at Venture capital market in Germany | KfW

Where does the German economy stand today? What does the country need to become future-proof? KfW Research explores these questions in the position paper “Managing the transition, strengthening growth”, with analyses of the current situation and recommendations for action in five policy areas. The paper is available for download at Papers and Proceedings on Economics | KfW